When we see records being broken and unprecedented events such as this, the onus is on those who deny any connection to climate change to prove their case. Global warming has fundamentally altered the background conditions that give rise to all weather. In the strictest sense, all weather is now connected to climate change. Kevin Trenberth

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Friday, August 30, 2013

"The Court finds that there is sufficient evidence in the record to
demonstrate that Plaintiff is likely to succeed on the merits," said a
DC Superior Court judge in her latest procedural ruling in
the defamation case of Michael Mann v. National Review, et al. "The
evidence before the Court indicates the likelihood that 'actual malice'
is present in the [National Review's] conduct." On August 30 the Court denied the Defendants' Motion for
Reconsideration of the Court's July 19 order, which had affirmed Prof.
Mann's right to proceed in his defamation lawsuit. The text of the
August 30 Court Order is here in PDF.Some excerpts from the Court Order denying Defendants' Motion for Reconsideration:

Defamation

... The Court finds that there is
sufficient evidence in the record to demonstrate that Plaintiff is
likely to succeed on the merits. As the Court stated in its previous
Order, the NR Defendants’ reference to Plaintiff “as the man behind the
fraudulent climate change ‘hockey stick’ graph” was essentially an
allegation of fraud by Plaintiff. ...

The Court clearly recognizes that some
members involved in the climate-change discussions and debates employ
harsh words. The NR Defendants are reputed to use this manner of speech;
however there is a line between rhetorical hyperbole and defamation. In
this case, the evidence before the Court demonstrates that something
more than mere rhetorical hyperbole is, at least at this stage present.
Accusations of fraud, especially where such accusations are made
frequently through the continuous usage of words such as “whitewashed,”
“intellectually bogus,” “ringmaster of the tree-ring circus” and
“cover-up” amount to more than rhetorical hyperbole. ...

The evidence before the Court indicates the likelihood that “actual malice” is present in the NR Defendants’ conduct. ...

Intentional Infliction of Emotional Distress ("IIED")

... The Court finds that Plaintiff’s
claim for IIED is similar to that for defamation. There is sufficient
evidence before the Court to indicate “actual malice.” The NR Defendants
have frequently accused Plaintiff of academic fraud regardless of their
awareness that Plaintiff has been investigated by several bodies and
his work found to be proper. The NR Defendant’s persistence despite the
findings of the investigative bodies could be likened to a witch hunt.
In fact, Plaintiff had nothing to do with the Sandusky case yet the NR
Defendants seized upon that criminal act by a pedophile and did more,
this Court finds, than simply comment on another article.

The Court agrees with the arguments
advanced by Plaintiff. To place Plaintiff’s name in the same sentence
with Sandusky (a convicted pedophile) is clearly outrageous.

by Abrahm
Lustgarten, PROPUBLICA, August 27, 2013Don Feusner ran dairy cattle on his 370-acre slice of northern
Pennsylvania until he could no longer turn a profit by farming. Then, at
age 60, he sold all but a few Angus and aimed for a comfortable
retirement on money from drilling his land for natural gas instead.
It seemed promising. Two wells drilled on his lease hit as sweet a spot
as the Marcellus shale could offer – tens of millions of cubic feet of
natural gas gushed forth. Last December, he received a check for $8,506
for a month’s share of the gas.
Then one day in April, Feusner ripped open his royalty envelope to find
that while his wells were still producing the same amount of gas, the
gusher of cash had slowed. His eyes cascaded down the page to his
monthly balance at the bottom: $1,690.
Chesapeake Energy, the company that drilled his wells, was withholding
almost 90% of Feusner’s share of the income to cover unspecified
“gathering” expenses and it wasn’t explaining why.“They said you’re going to be a millionaire in a couple of years, but
none of that has happened,” Feusner said. “I guess we’re expected to
just take whatever they want to give us.”Like every landowner who signs a lease agreement to allow a drilling
company to take resources off his land, Feusner is owed a cut of what is
produced, called a royalty.
In 1982, in a landmark effort to keep people from being fleeced by the
oil industry, the federal government passed a law establishing that
royalty payments to landowners would be no less than 12.5% of the
oil and gas sales from their leases.
From Pennsylvania to North Dakota, a powerful argument for allowing
extensive new drilling has been that royalty payments would enrich local
landowners, lifting the economies of heartland and rural America. The
boom was also supposed to fill the government’s coffers, since roughly
30 percent of the nation’s drilling takes place on federal land.
Over the last decade, an untold number of leases were signed, and
hundreds of thousands of wells have been sunk into new energy deposits
across the country.
But manipulation of costs and other data by oil companies is keeping
billions of dollars in royalties out of the hands of private and
government landholders, an investigation by ProPublica has found.
An analysis of lease agreements, government documents and thousands of
pages of court records shows that such underpayments are widespread.
Thousands of landowners like Feusner are receiving far less than they
expected based on the sales value of gas or oil produced on their
property. In some cases, they are being paid virtually nothing at all.In many cases, lawyers and auditors who specialize in production
accounting tell ProPublica energy companies are using complex accounting
and business arrangements to skim profits off the sale of resources and
increase the expenses charged to landowners.
Deducting expenses is itself controversial and debated as unfair among
landowners, but it is allowable under many leases, some of which were
signed without landowners fully understanding their implications.
But some companies deduct expenses for transporting and processing
natural gas, even when leases contain clauses explicitly prohibiting
such deductions. In other cases, according to court files and documents
obtained by ProPublica, they withhold money without explanation for
other, unauthorized expenses, and without telling landowners that the
money is being withheld.
Significant amounts of fuel are never sold at all – companies use it
themselves to power equipment that processes gas, sometimes at
facilities far away from the land on which it was drilled. In Oklahoma,
Chesapeake deducted marketing fees from payments to a landowner – a
joint owner in the well – even though the fees went to its own
subsidiary, a pipeline company called Chesapeake Energy Marketing. The
landowner alleged the fees had been disguised in the form of lower sales
prices. A court ruled that the company was entitled to charge the fees.
Costs such as these are normally only documented in private transactions
between energy companies, and are almost never detailed to landowners.“To find out how the calculation is done, you may well have to file a
lawsuit and get it through discovery,” said Owen Anderson, the Eugene
Kuntz Chair in Oil, Gas & Natural Resources at the University of
Oklahoma College of Law, and an expert on royalty disputes. “I’m not
aware of any state that requires that level of disclosure.”To keep royalties low, companies sometimes set up subsidiaries or
limited partnerships to which they sell oil and gas at reduced prices,
only to recoup the full value of the resources when their subsidiaries
resell it. Royalty payments are usually based on the initial
transaction.
In other cases, companies have bartered for services off the books,
hiding the full value of resources from landowners. In a 2003 case in
Louisiana, for example, Kerr McGee, now owned by Anadarko Petroleum,
sold its oil for a fraction of its value – and paid royalties to the
government on the discounted amount – in a trade arrangement for
marketing services that were never accounted for on its cash flow
statements. The federal government sued, and won.The government has an arsenal of tools to combat royalty underpayment.
The Department of Interior has rules governing what deductions are
allowable. It also employs an auditing agency that, while far from
perfect, has uncovered more than a dozen instances in which drillers
were “willful” in deceiving the government on royalty payments just
since 2011. A spokesman for the Department of Interior’s Office of
Natural Resources Revenue says that over the last three decades, the
government has recouped more than $4 billion in unpaid fees from such
cases.There are few such protective mechanisms for private landowners, though,
who enter into agreements without regulatory oversight and must pay to
audit or challenge energy companies out of their own pockets.
ProPublica made several attempts to contact Chesapeake Energy for this
article. The company declined, via email, to answer any questions
regarding royalties, and then did not respond to detailed sets of
questions submitted afterward. The leading industry trade group, the
American Petroleum Institute, also declined to comment on landowners’
allegations of underpayments, saying that individual companies would
need to respond to specific claims.
Anderson acknowledged that many landowners enter into contracts without
understanding their implications and said it was up to them to do due
diligence before signing agreements with oil and gas companies.“The duty of the corporation is to make money for shareholders,”
Anderson said. “Every penny that a corporation can save on royalties is a
penny of profit for shareholders, so why shouldn’t they try to save
every penny that they can on payments to royalty owners?” Gas flows up through a well head on Feusner’s property, makes a couple
of turns and passes a meter that measures its volume. Then it flows into
larger pipes fed by multiple pipelines in a process the industry calls
“gathering.” Together, the mixed gases might get compressed or processed
to improve the gas quality for final sale, before feeding into a larger
network of pipelines that extends for hundreds of miles to an end
point, where the gas is sold and ultimately distributed to consumers.
Each section of pipeline is owned and managed by a different company.
These companies buy the gas from Chesapeake, but have no accountability
to Feusner. They operate under minimal regulatory oversight, and have
sales contracts with the well operator, in this case Chesapeake, with
terms that are private. Until Chesapeake sold its pipeline company last
winter, the pipelines were owned by its own subsidiaries.As in many royalty disputes, it is not clear exactly which point of sale
is the one on which Feusner’s payments should be based – the last sale
onto the open market or earlier changes in custody. It’s equally unclear
whether the expenses being charged to Feusner are incurred before or
after that point of sale, or what processes, exactly, fall under the
term “gathering.” Definitions of that term vary, depending on who is
asked. In an email, a spokesperson for Chesapeake declined to say how
the company defines gathering.Making matters more complicated, the rights to the gas itself are often
split into shares, sometimes among as many as a half-dozen companies,
and are frequently traded.Feusner originally signed a lease with a
small drilling company, which sold the rights to the lease to
Chesapeake. Chesapeake sold a share of its rights in the lease to a
Norwegian company, Statoil, which now owns about a one-third interest in
the gas produced from Feusner’s property.
Chesapeake and Statoil pay him royalties and account for expenses
separately. Statoil does not deduct any expenses in calculating
Feusner’s royalty payments, possibly because it has a different
interpretation of what’s allowed.“Statoil’s policy is to carefully look at each individual lease, and to
take post-production deductions only where the lease and the law allow
for it,” a company spokesman wrote in an email. “We take our production
in kind from Chesapeake and we have no input into how they interpret the
leases.”Once the gas is produced, a host of opaque transactions influence how
sales are accounted for and proceeds are allocated to everyone entitled
to a slice. The chain of custody and division of shares is so complex
that even the country’s best forensic accountants struggle to make sense
of energy companies’ books.
Feusner’s lease does not give him the right to review Chesapeake’s
contracts with its partners, or to verify the sales figures that the
company reports to him. Pennsylvania – though it recently passed a law
requiring that the total amount of deductions be listed on royalty
statements – has no laws dictating at what point a sale price needs to
be set, and what expenses are legitimate.Concerns about royalties have begun to attract the attention of state
legislators, who held a hearing on the issue in June. Some have
acknowledged a need to clarify minimum royalty guarantees in the state,
but so far, that hasn’t happened.“If you have a system that is not transparent from wellhead to burner
tip and you hide behind confidentiality, then you have something to
hide,” Jerry Simmons, executive director of the National Association of
Royalty Owners (NARO), the premier organization representing private
landowners in the U.S., told ProPublica in a 2009 interview. Simmons
said recently that his views had not changed, but declined to be
interviewed again.“The idea that regulatory agencies don’t know the
volume of gas being produced in this country is absurd.”Because so many disputes come down to interpretations of contract
language, companies often look to courts for clarification. Not many
royalty cases have been argued in Pennsylvania so far, but in 2010, a
landmark decision, Kilmer v. Elexco Land Services, set out that the
state’s minimum royalty guarantee applied to revenues before expenses
were calculated, and that, when allowed by leases, energy companies were
free to charge back deductions against those royalties.
Since then, Pennsylvania landowners say, Chesapeake has been making
larger deductions from their checks. (The company did not respond to
questions about this.)In April, Feusner’s effective royalty rate on the
gas sold by Chesapeake was less than 1%.
Paul Sidorek is an accountant representing some 60 northeastern
Pennsylvania landowners who receive royalty income from drilling. He’s
also a landowner himself – in 2009, he leased 145 acres, and that lease
was eventually sold to Chesapeake. Well aware of the troubles
encountered by others, Sidorek negotiated a 20% royalty and made
sure his lease said explicitly that no expenses could be deducted from
the sale of the gas produced on his property.
Yet now, Sidorek says, Chesapeake is deducting as much as 30%
from his royalties, attributing it to “gathering” and “third party”
expenses, an amount that adds up to some $40,000 a year.“Now that the royalties are flowing, some people just count it as a
blessing and say we don’t care what Chesapeake does, it’s money we
wouldn’t have had before,” Sidorek said. But he’s filed a lawsuit.“I
figure I could give my grandson a first-class education for what
Chesapeake is deducting that they are not entitled to, so I’m taking it
on.”Landowners, lawyers, legislators and even some energy industry groups
say Chesapeake stands out for its confusing accounting and tendency to
deduct the most expenses from landowners’ royalty checks in
Pennsylvania.“They’ve had a culture of doing cutthroat business,” said Jackie Root,
president of Pennsylvania’s chapter of the National Association of
Royalty Owners.
Chesapeake did not respond to questions on whether its approach differs
from that of other companies.
Root and others report good working relationships with other companies
operating wells in Pennsylvania, and say that deductions – if they occur
at all – are modest. Statoil, which has an interest in a number of
Chesapeake wells, does not deduct any expenses on its share of many of
the same leases. In an email from a spokesperson, the company said “We
always seek to deal with our lease holders in a fair manner.”Several landowners said that not only do deductions vary between
companies using the same gas “gathering” network – sales prices do as
well.
On Sidorek’s royalty statements, for example, Chesapeake and Statoil
disclose substantially different sales prices for the same gas moved
through the same system.“If Statoil can consistently sell the gas for $.25 more, and Chesapeake
claims it’s the premier producer in the country, then why the hell can’t
they get the same price Statoil does for the same gas on the same day?”
Sidorek wondered.
He thinks Chesapeake was giving a discount to a pipeline company it used
to own. Chesapeake did not respond to questions about the price
discrepancy.Chesapeake may be the focus of landowner ire in Pennsylvania, but across
the country thousands of landowners have filed similar complaints
against many oil and gas producers.
In dozens of class actions reviewed by ProPublica, landowners have
alleged they cannot make sense of the expenses deducted from their
payments or that companies are hiding charges
Publicly traded oil and gas companies also have disclosed settlements
and judgments related to royalty disputes that, collectively, add up to
billions of dollars.In 2003, a jury found that Exxon had defrauded the state of Alabama out
of royalty payments and ordered the company to pay nearly $103 million
in back royalties and interest, plus $11.8 billion in punitive damages.
(The punitive damages were reduced to $3.5 billion on appeal, and then
eliminated by the state supreme court in 2007.)In 2007, a jury ordered a Chesapeake subsidiary to pay $404 million,
including $270 million in punitive damages, for cheating a class of
leaseholders in West Virginia.In 2010, Shell was hit with a $66 million
judgment, including $52 million in punitive fines, after a jury decided
the company had hidden a prolific well and then intentionally misled
landowners when they sought royalties. The judgment was upheld on
appeal.Since the language of individual lease agreements vary widely, and some
date back nearly 100 years, many of the disagreements about deductions
boil down to differing interpretations of the language in the contract.
In Pennsylvania, however, courts have set few precedents for how leases
should be read and substantial hurdles stand in the way of landowners
interested in bringing cases.Pennsylvania attorneys say many of their clients’ leases do not allow
landowners to audit gas companies to verify their accounting. Even
landowners allowed to conduct such audits could have to shell out tens
of thousands of dollars to do so.
When audits turn up discrepancies, attorneys say, many Pennsylvania
leases require landowners to submit to arbitration – another exhaustive
process that can cost tens of thousands of dollars. Arbitration clauses
can also make it more difficult for landowners to join class action
suits in which individuals can pool their resources and gain enough
leverage to take on the industry.“They basically are daring you to sue them,” said Aaron Hovan, an
attorney in Tunkhannock, Pa., representing landowners who have royalty
concerns. “And you need to have a really good case to go through all of
that, and then you could definitely lose.”All of these hurdles have to be cleared within Pennsylvania’s four-year
statute of limitations. Landowners who realize too late that they have
been underpaid for years – or who inherit a lease from an ailing parent
who never bothered to check their statements – are simply out of luck.
Even if a gas company were found liable for underpaying royalties in
Pennsylvania, it would have little to fear. It would owe only the amount
it should have paid in the first place; unlike Oklahoma and other
states, Pennsylvania law does not allow for any additional interest on
unpaid royalties and sets a very high bar for winning punitive
penalties.“They just wait to see who challenges them, they keep what they keep,
they give up what they lose,” said Root, the NARO chapter president. “It
may just be part of their business decision to do it this way.”Follow Abrahm Lustgarden on Twitter @AbrahmLhttp://www.philly.com/philly/business/Frackers_.html

rahm
Lustgarten, PROPUBLICA
Posted: Tuesday, August 27, 2013, 11:00 PM
Don Feusner ran dairy cattle on his 370-acre slice of northern
Pennsylvania until he could no longer turn a profit by farming. Then, at
age 60, he sold all but a few Angus and aimed for a comfortable
retirement on money from drilling his land for natural gas instead.
It seemed promising. Two wells drilled on his lease hit as sweet a spot
as the Marcellus shale could offer – tens of millions of cubic feet of
natural gas gushed forth. Last December, he received a check for $8,506
for a month’s share of the gas.
Then one day in April, Feusner ripped open his royalty envelope to find
that while his wells were still producing the same amount of gas, the
gusher of cash had slowed. His eyes cascaded down the page to his
monthly balance at the bottom: $1,690.
Chesapeake Energy, the company that drilled his wells, was withholding
almost 90 percent of Feusner’s share of the income to cover unspecified
“gathering” expenses and it wasn’t explaining why.
More coverage
Pa. board drafts new gas drilling rules
Fracking health project puts numbers to debate
“They said you’re going to be a millionaire in a couple of years, but
none of that has happened,” Feusner said. “I guess we’re expected to
just take whatever they want to give us.”
Like every landowner who signs a lease agreement to allow a drilling
company to take resources off his land, Feusner is owed a cut of what is
produced, called a royalty.
In 1982, in a landmark effort to keep people from being fleeced by the
oil industry, the federal government passed a law establishing that
royalty payments to landowners would be no less than 12.5 percent of the
oil and gas sales from their leases.
From Pennsylvania to North Dakota, a powerful argument for allowing
extensive new drilling has been that royalty payments would enrich local
landowners, lifting the economies of heartland and rural America. The
boom was also supposed to fill the government’s coffers, since roughly
30 percent of the nation’s drilling takes place on federal land.
Over the last decade, an untold number of leases were signed, and
hundreds of thousands of wells have been sunk into new energy deposits
across the country.
But manipulation of costs and other data by oil companies is keeping
billions of dollars in royalties out of the hands of private and
government landholders, an investigation by ProPublica has found.
An analysis of lease agreements, government documents and thousands of
pages of court records shows that such underpayments are widespread.
Thousands of landowners like Feusner are receiving far less than they
expected based on the sales value of gas or oil produced on their
property. In some cases, they are being paid virtually nothing at all.
In many cases, lawyers and auditors who specialize in production
accounting tell ProPublica energy companies are using complex accounting
and business arrangements to skim profits off the sale of resources and
increase the expenses charged to landowners.
Deducting expenses is itself controversial and debated as unfair among
landowners, but it is allowable under many leases, some of which were
signed without landowners fully understanding their implications.
But some companies deduct expenses for transporting and processing
natural gas, even when leases contain clauses explicitly prohibiting
such deductions. In other cases, according to court files and documents
obtained by ProPublica, they withhold money without explanation for
other, unauthorized expenses, and without telling landowners that the
money is being withheld.
Significant amounts of fuel are never sold at all – companies use it
themselves to power equipment that processes gas, sometimes at
facilities far away from the land on which it was drilled. In Oklahoma,
Chesapeake deducted marketing fees from payments to a landowner – a
joint owner in the well – even though the fees went to its own
subsidiary, a pipeline company called Chesapeake Energy Marketing. The
landowner alleged the fees had been disguised in the form of lower sales
prices. A court ruled that the company was entitled to charge the fees.
Costs such as these are normally only documented in private transactions
between energy companies, and are almost never detailed to landowners.
“To find out how the calculation is done, you may well have to file a
lawsuit and get it through discovery,” said Owen Anderson, the Eugene
Kuntz Chair in Oil, Gas & Natural Resources at the University of
Oklahoma College of Law, and an expert on royalty disputes. “I’m not
aware of any state that requires that level of disclosure.”
To keep royalties low, companies sometimes set up subsidiaries or
limited partnerships to which they sell oil and gas at reduced prices,
only to recoup the full value of the resources when their subsidiaries
resell it. Royalty payments are usually based on the initial
transaction.
In other cases, companies have bartered for services off the books,
hiding the full value of resources from landowners. In a 2003 case in
Louisiana, for example, Kerr McGee, now owned by Anadarko Petroleum,
sold its oil for a fraction of its value – and paid royalties to the
government on the discounted amount – in a trade arrangement for
marketing services that were never accounted for on its cash flow
statements. The federal government sued, and won.
The government has an arsenal of tools to combat royalty underpayment.
The Department of Interior has rules governing what deductions are
allowable. It also employs an auditing agency that, while far from
perfect, has uncovered more than a dozen instances in which drillers
were “willful” in deceiving the government on royalty payments just
since 2011. A spokesman for the Department of Interior’s Office of
Natural Resources Revenue says that over the last three decades, the
government has recouped more than $4 billion in unpaid fees from such
cases.
There are few such protective mechanisms for private landowners, though,
who enter into agreements without regulatory oversight and must pay to
audit or challenge energy companies out of their own pockets.
ProPublica made several attempts to contact Chesapeake Energy for this
article. The company declined, via email, to answer any questions
regarding royalties, and then did not respond to detailed sets of
questions submitted afterward. The leading industry trade group, the
American Petroleum Institute, also declined to comment on landowners’
allegations of underpayments, saying that individual companies would
need to respond to specific claims.
Anderson acknowledged that many landowners enter into contracts without
understanding their implications and said it was up to them to do due
diligence before signing agreements with oil and gas companies.
“The duty of the corporation is to make money for shareholders,”
Anderson said. “Every penny that a corporation can save on royalties is a
penny of profit for shareholders, so why shouldn’t they try to save
every penny that they can on payments to royalty owners?”
* * *
Gas flows up through a well head on Feusner’s property, makes a couple
of turns and passes a meter that measures its volume. Then it flows into
larger pipes fed by multiple pipelines in a process the industry calls
“gathering.” Together, the mixed gases might get compressed or processed
to improve the gas quality for final sale, before feeding into a larger
network of pipelines that extends for hundreds of miles to an end
point, where the gas is sold and ultimately distributed to consumers.
Each section of pipeline is owned and managed by a different company.
These companies buy the gas from Chesapeake, but have no accountability
to Feusner. They operate under minimal regulatory oversight, and have
sales contracts with the well operator, in this case Chesapeake, with
terms that are private. Until Chesapeake sold its pipeline company last
winter, the pipelines were owned by its own subsidiaries.
As in many royalty disputes, it is not clear exactly which point of sale
is the one on which Feusner’s payments should be based – the last sale
onto the open market or earlier changes in custody. It’s equally unclear
whether the expenses being charged to Feusner are incurred before or
after that point of sale, or what processes, exactly, fall under the
term “gathering.” Definitions of that term vary, depending on who is
asked. In an email, a spokesperson for Chesapeake declined to say how
the company defines gathering.
Making matters more complicated, the rights to the gas itself are often
split into shares, sometimes among as many as a half-dozen companies,
and are frequently traded. Feusner originally signed a lease with a
small drilling company, which sold the rights to the lease to
Chesapeake. Chesapeake sold a share of its rights in the lease to a
Norwegian company, Statoil, which now owns about a one-third interest in
the gas produced from Feusner’s property.
Chesapeake and Statoil pay him royalties and account for expenses
separately. Statoil does not deduct any expenses in calculating
Feusner’s royalty payments, possibly because it has a different
interpretation of what’s allowed.
“Statoil’s policy is to carefully look at each individual lease, and to
take post-production deductions only where the lease and the law allow
for it,” a company spokesman wrote in an email. “We take our production
in kind from Chesapeake and we have no input into how they interpret the
leases.”
Once the gas is produced, a host of opaque transactions influence how
sales are accounted for and proceeds are allocated to everyone entitled
to a slice. The chain of custody and division of shares is so complex
that even the country’s best forensic accountants struggle to make sense
of energy companies’ books.
Feusner’s lease does not give him the right to review Chesapeake’s
contracts with its partners, or to verify the sales figures that the
company reports to him. Pennsylvania – though it recently passed a law
requiring that the total amount of deductions be listed on royalty
statements – has no laws dictating at what point a sale price needs to
be set, and what expenses are legitimate.
Concerns about royalties have begun to attract the attention of state
legislators, who held a hearing on the issue in June. Some have
acknowledged a need to clarify minimum royalty guarantees in the state,
but so far, that hasn’t happened.
“If you have a system that is not transparent from wellhead to burner
tip and you hide behind confidentiality, then you have something to
hide,” Jerry Simmons, executive director of the National Association of
Royalty Owners (NARO), the premier organization representing private
landowners in the U.S., told ProPublica in a 2009 interview. Simmons
said recently that his views had not changed, but declined to be
interviewed again. “The idea that regulatory agencies don’t know the
volume of gas being produced in this country is absurd.”
Because so many disputes come down to interpretations of contract
language, companies often look to courts for clarification. Not many
royalty cases have been argued in Pennsylvania so far, but in 2010, a
landmark decision, Kilmer v. Elexco Land Services, set out that the
state’s minimum royalty guarantee applied to revenues before expenses
were calculated, and that, when allowed by leases, energy companies were
free to charge back deductions against those royalties.
Since then, Pennsylvania landowners say, Chesapeake has been making
larger deductions from their checks. (The company did not respond to
questions about this.) In April, Feusner’s effective royalty rate on the
gas sold by Chesapeake was less than 1 percent.
Paul Sidorek is an accountant representing some 60 northeastern
Pennsylvania landowners who receive royalty income from drilling. He’s
also a landowner himself – in 2009, he leased 145 acres, and that lease
was eventually sold to Chesapeake. Well aware of the troubles
encountered by others, Sidorek negotiated a 20 percent royalty and made
sure his lease said explicitly that no expenses could be deducted from
the sale of the gas produced on his property.
Yet now, Sidorek says, Chesapeake is deducting as much as 30 percent
from his royalties, attributing it to “gathering” and “third party”
expenses, an amount that adds up to some $40,000 a year.
“Now that the royalties are flowing, some people just count it as a
blessing and say we don’t care what Chesapeake does, it’s money we
wouldn’t have had before,” Sidorek said. But he’s filed a lawsuit. “I
figure I could give my grandson a first-class education for what
Chesapeake is deducting that they are not entitled to, so I’m taking it
on.”
Landowners, lawyers, legislators and even some energy industry groups
say Chesapeake stands out for its confusing accounting and tendency to
deduct the most expenses from landowners’ royalty checks in
Pennsylvania.
“They’ve had a culture of doing cutthroat business,” said Jackie Root,
president of Pennsylvania’s chapter of the National Association of
Royalty Owners.
Chesapeake did not respond to questions on whether its approach differs
from that of other companies.
Root and others report good working relationships with other companies
operating wells in Pennsylvania, and say that deductions – if they occur
at all – are modest. Statoil, which has an interest in a number of
Chesapeake wells, does not deduct any expenses on its share of many of
the same leases. In an email from a spokesperson, the company said “We
always seek to deal with our lease holders in a fair manner.”
Several landowners said that not only do deductions vary between
companies using the same gas “gathering” network – sales prices do as
well.
On Sidorek’s royalty statements, for example, Chesapeake and Statoil
disclose substantially different sales prices for the same gas moved
through the same system.
“If Statoil can consistently sell the gas for $.25 more, and Chesapeake
claims it’s the premier producer in the country, then why the hell can’t
they get the same price Statoil does for the same gas on the same day?”
Sidorek wondered.
He thinks Chesapeake was giving a discount to a pipeline company it used
to own. Chesapeake did not respond to questions about the price
discrepancy.
Chesapeake may be the focus of landowner ire in Pennsylvania, but across
the country thousands of landowners have filed similar complaints
against many oil and gas producers.
In dozens of class actions reviewed by ProPublica, landowners have
alleged they cannot make sense of the expenses deducted from their
payments or that companies are hiding charges
Publicly traded oil and gas companies also have disclosed settlements
and judgments related to royalty disputes that, collectively, add up to
billions of dollars.
In 2003, a jury found that Exxon had defrauded the state of Alabama out
of royalty payments and ordered the company to pay nearly $103 million
in back royalties and interest, plus $11.8 billion in punitive damages.
(The punitive damages were reduced to $3.5 billion on appeal, and then
eliminated by the state supreme court in 2007.)
In 2007, a jury ordered a Chesapeake subsidiary to pay $404 million,
including $270 million in punitive damages, for cheating a class of
leaseholders in West Virginia. In 2010, Shell was hit with a $66 million
judgment, including $52 million in punitive fines, after a jury decided
the company had hidden a prolific well and then intentionally misled
landowners when they sought royalties. The judgment was upheld on
appeal.
Since the language of individual lease agreements vary widely, and some
date back nearly 100 years, many of the disagreements about deductions
boil down to differing interpretations of the language in the contract.
In Pennsylvania, however, courts have set few precedents for how leases
should be read and substantial hurdles stand in the way of landowners
interested in bringing cases.
Pennsylvania attorneys say many of their clients’ leases do not allow
landowners to audit gas companies to verify their accounting. Even
landowners allowed to conduct such audits could have to shell out tens
of thousands of dollars to do so.
When audits turn up discrepancies, attorneys say, many Pennsylvania
leases require landowners to submit to arbitration – another exhaustive
process that can cost tens of thousands of dollars. Arbitration clauses
can also make it more difficult for landowners to join class action
suits in which individuals can pool their resources and gain enough
leverage to take on the industry.
“They basically are daring you to sue them,” said Aaron Hovan, an
attorney in Tunkhannock, Pa., representing landowners who have royalty
concerns. “And you need to have a really good case to go through all of
that, and then you could definitely lose.”
All of these hurdles have to be cleared within Pennsylvania’s four-year
statute of limitations. Landowners who realize too late that they have
been underpaid for years – or who inherit a lease from an ailing parent
who never bothered to check their statements – are simply out of luck.
Even if a gas company were found liable for underpaying royalties in
Pennsylvania, it would have little to fear. It would owe only the amount
it should have paid in the first place; unlike Oklahoma and other
states, Pennsylvania law does not allow for any additional interest on
unpaid royalties and sets a very high bar for winning punitive
penalties.
“They just wait to see who challenges them, they keep what they keep,
they give up what they lose,” said Root, the NARO chapter president. “It
may just be part of their business decision to do it this way.”
Follow Abrahm Lustgarden on Twitter @AbrahmL
Read more at http://www.philly.com/philly/business/Frackers_.html#3RqTyJFPgPzRelsY.99

Researchers have found a "mega canyon" in Greenland
tucked under a mile and a half of ice that could rival the size and
depth of Arizona’s Grand Canyon. While the discovery won’t become a
major tourist attraction, it does provide insight into how meltwater
courses its way underneath the world’s second-largest ice sheet, and how
that might affect ice shelves and glaciers at its periphery. Melting
ice from Greenland and Antarctica is now the dominant contributor to global sea level rise, which is expected to accelerate in coming decades.

The
bedrock that Greenland’s ice sheet sits on has generally been thought to
be flat. However, the new discovery, laid out in the latest issue of
the journal Science,
shows it may be far more complex than previously thought.

“There was a
hint something was there, but this gives us rich imagery,” said Robin
Bell, who heads the polar geophysics group at Columbia's Lamont-Doherty
Earth Observatory, and was not associated with the study.

A three dimensional view of the subglacial canyon
looking northeast. Researchers used NASA IceBridge data to visualize the
canyon buried under a mile and a half of ice. Credit: Jonathan Bamber/Bristol University.

Using data from NASA’s Operation IceBridge,
which uses a special type of radar to peer underneath the ice's
surface, the new research found a canyon that stretches for at least 465
miles from Greenland’s interior to its northwest coast. Parts of the
canyon are a half mile deep and over 6 miles wide. In comparison, the
Grand Canyon is 277 miles long and at its deepest point is over a mile
deep and 18 miles wide.

The
researchers who found it have dubbed it a “paleofluvial megacanyon,”
indicating that it was formed by a river well before Greenland’s ice
sheet covered it up some 3.5 million years ago.

But
the canyon is more than just an awe-inspiring discovery. According to
Jonathan Bamber, professor of physical geography at Bristol University,
U.K., the canyon effectively funnels water from Greenland’s interior to
the ocean. He stressed that the melting processes under the ice have
little connection with climate change.

However,
as it nears the periphery, that water can affect the periphery of the
ice sheet, particularly the shelves that stretch out into the ocean.
There, ice has been slipping into the ocean and melting faster in recent
decades.

One dramatic example is the Petermann ice shelf, which sits near the mouth of the canyon. The ice shelf made headlines in 2010 when it shed an iceberg four times the size of Manhattan and again in 2012 when it shed another iceberg half that size.

In 2008, researchers found channels in
the bottom of the Petermann ice shelf, which weakened the ice and
turned out to be harbingers of the events to come. Their findings
suggested that warmer ocean water caused the channels. However, the new
study suggests the mega canyon may be playing a role here as well.

“We
argue that an important contribution to these undershelf channels is
that there’s a large amount of subglacial channels,” Bamber said.

Bell
likened the process to beating eggs, where the water flowing down the
canyon acts as a “whisk,” mixing up warmer ocean water under the ice
shelf and deepening the cavities more rapidly.

Increased ice melt from this, as well as other surface melting due to increasing air temperatures could make Greenland a major contributor to sea level rise
by the end of the 21st century. The melting of Greenland’s glaciers has
also added a large boost of freshwater to the North Atlantic which
could alter ocean currents and the ocean’s ability to take up carbon
dioxide.

Certain topics seem to be Sisyphean: you do your best to clarify and
then, there it is, the boulder of common sense sitting at the bottom of
the hill, demanding to be rolled up once again. Elementary issues in
macropolicy, like the fact that contractionary fiscal policy is
contractionary, exemplify this, but so do the basics of climate change.
Here the elements in question are that pricing carbon can go a long way
toward avoiding the worst scenarios, that the primary channel is
economic substitution, and that good policy pushes out the political
limits to action.
Now consider a recent argument that gets all of this wrong. It comes from Jesse Jenkins of The Energy Collective; I was pointed to it by the usually insightful David Roberts, who in this case misses the boat. The Cliff Notes version goes like this:
1. Carbon accumulation in the atmosphere is the result of GDP growth and existing technology.
2. We don’t want to cut GDP growth, so the solution is technological innovation, primarily in energy.
3. Carbon pricing itself can’t accomplish this. The correct price would
equal the social cost of carbon (the damage done by emitting an extra
ton, monetized), but voters are unwilling to support taxes this high.
This is because such taxes would achieve their purpose only through
massive cuts in per capita income (GDP).
4. But modest carbon prices will generate revenue. This revenue can be
channeled by government into R&D. Just like government-financed
research gave us the internet, it can give us the future energy
technologies that will put the global economy back within ecological
limits.
Almost every detail of this argument is flat-out wrong, and the totality
rolls the rock back down the hill and calls it a monument.
Just to give a little more heft to the starting point, read through this excerpt from a letter to the Financial Times by political scientist Roger Pielke Jr., quoted with approval by Jenkins:

Carbon emissions are the product of (a) GDP growth and (b) technologies
of energy consumption and production. ... Thus, a “carbon cap” actually
means that a government is committing to either a cessation of economic
growth or to the systematic advancement of technological innovation in
energy systems on a predictable schedule, such that economic growth is
not constrained. Because halting economic growth is not an option, in
China or anywhere else, and technological innovation does not occur via
fiat, there is in practice no such thing as a “carbon cap.”Where
carbon caps have been attempted, clever legislators have used gimmicks
such as carbon offsets or set caps unrealistically high so that negative
effects on GDP do not result and the unpredictability of energy
innovation does not become an issue.It
should thus not come as a surprise that carbon caps have not led to
emissions reductions or even limitations anywhere. China will be no
different. The sooner that we realize that advances in technology are
what will reduce emissions, not arbitrary targets and timetables for
reductions, the sooner we can focus our attention on the serious
business of energy innovation.

So what’s wrong?
1. Pielke sows confusion with the word “technologies”. In the standard
IPAT decomposition, where Impact equals population times Affluence (GDP
per capita) times Technology (impact per unit GDP), technology refers to
the technologies in use, due to both how goods are made and what goods
we use. This is the relevant definition for understanding carbon
emissions. It does not mean “everything we currently know about how to
produce stuff”, which is how it is sometimes used by economists. What
Pielke is doing is appealing to the logic of the first definition in
order to invoke the second. By a type of verbal illusion, he brings us
from a recognition that how we produce stuff is crucial to the claim
that everything depends on inventing new ways of doing it.
What he leaves out, of course, is substitution. Even with existing
“technology”, in the sense of everything we currently know, we have
quite a bit of scope for producing things differently and changing the
mix of what we produce. We can use fuel-efficient cars rather than
guzzlers. We can teleconference rather than fly people to distant
locations for meetings. We can build wind turbines and the grid needed
to support them rather than more coal or oil infrastructure. There are
gobs of opportunities for substitution in a modern economy, and the
first purpose of pricing carbon is to make them happen. This is not
speculative. Countries like the US, which have lower taxes on energy
products, have higher energy consumption per unit GDP than countries,
like those in continental Europe, that have higher taxes. There really
is a law of demand out there.
2. Innovation responds to prices. When the price of computer RAM
collapsed, software companies started cranking out feature-bloated,
RAM-intensive products. Funny thing about that. As fossil fuel prices
appear to move to higher plateaus, Boeing and Airbus work on more
fuel-efficient planes. No one made them do this; it’s how markets work,
for better and worse. This is not to say that governments can’t speed
up the process by subsidizing research that private firms won’t
undertake—of course they can. But we will make a lot more progress a
lot faster if carbon is expensive and there are financial incentives to
economize on it.
3. The social cost of carbon is a chimera. There is no way to put a credible price tag on a ton of carbon. It’s the wrong way to think about what the problem is.
(Insurance is the right way.) This means you can’t denounce carbon
pricing because it fails to achieve some sort of “objectively correct”
level. It’s simply a tool to be used in conjunction with other tools.
4. There are lots of things that can be done by way of regulation to
reduce carbon emissions, but most involve inconvenience. You can force
people to change how they build houses or what standards have to be met
by appliances, but in practice this means people will have to do things
they would not otherwise do. Sometimes that’s not a problem: people
often lack information and will be just as happy doing the regulatory
thing as whatever they were doing before. Quite often it is a problem:
you prevent people from doing something they actually prefer doing. For
instance, you can change the parking rules so that people can’t stay
more than 15 minutes in a parking space for a large swath of a city.
This will force them to use other modes of transportation but it will
piss them off. Just as there are limits to the acceptability of carbon
prices, there are limits to the acceptability of regulations. You want a
mix of measures that pack the most emission reductions within the
existing political constraints. As you back off on one mechanism, like
prices, you are more vulnerable to the constraints on the others.
5. And now a word about what determines those constraints. Yes, the
higher the carbon price the less willing people will be to vote for
them. But that constraint can be relaxed by structuring your program to
give money back to the citizens in as visible a way as possible. How
much relaxation is not known at this point and may depend on other
factors as well, but we need all the relaxation we can get. That’s why
taking carbon revenues and funneling them to businesses to promote
R&D is really counterproductive. (a) Give them back to voters. (b)
Don’t give them to businesses, which will get voters even angrier.
6. In any case, the binding constraint today is not the voter but the
CEO. The business community wants to fob the cost of pricing carbon and
substituting other products and methods onto anyone else they can, so
what we get are loophole-ridden systems in countries that have carbon
pricing and no carbon pricing at all in places like the US. But that is
not about policy design—it’s simply the deep political economic funk
we’ve all fallen into. To do anything else, whether about
macroeconomics or the climate, we have to find a way out of post-democracy.

Thursday, August 29, 2013

Insight: crops will face more extreme heat during flowering season

by Sharon Gourdji, environmentalresearchweb, August 26, 2013

Extreme heat during the flowering period of crops
can interfere with pollination and grain formation, and severely reduce
yields. Along with increases in global mean temperature, extreme heat
events – where temperatures cross crop-specific critical thresholds –
are becoming increasingly common. In this study,
we found that wheat around the world has been exposed to extreme heat
in the last 30 years and project that wheat, maize and rice will be
exposed to three times as much heat by the 2050s.

We started with global maps of harvested areas for four major crops:
maize, rice, soybean and wheat. We then paired these regions with crop
calendars and air temperatures between sowing and harvest for each year
from 1980 to 2059. As well as calculating growing season mean
temperatures, we identified a 30-day window around flowering in the
middle of the season, and then counted the number of days in this period
when temperatures crossed critical values, and where we would expect to
see large yield declines. These temperatures are 34˚C for wheat, 35˚C
for maize, 36˚C for rice, and 39˚C for soybean.

We then constructed historical air temperatures from 1980 to 2011 by
interpolating weather station data. Future temperature projections up to
the 2050s were taken from a range of climate models included in the
CMIP5 inter-comparison project.

Our results show that maize has the highest current exposure to heat,
with 15% of the total global area being exposed to temperatures above
the critical temperature in the 2000s. Wheat in the Middle East and
Central and South Asia has become increasingly problematic in recent
decades, while the main rice-growing regions in South, East and
Southeast Asia are expected to cross temperature thresholds increasingly
in the next 30 to 40 years.

While faster plant growth at higher temperatures may lead to earlier
flowering and somewhat reduced extreme heat exposure for wheat grown in
temperate areas, this will have little impact for crops grown in
tropical locations, where the temperature varies little throughout the
year. Other environmental change factors, such as rising atmospheric
carbon dioxide and changes in soil moisture, will also affect crop
yields in coming decades. That said, stress during the reproductive
period will continue to present a risk for crop production regardless of
other beneficial changes. Farmers, working with all levels of
government, need to think proactively about how to prepare for these
changes through crop and variety switching, shifting sowing dates,
irrigation and agronomic management, and potentially moving cropping
systems to other regions altogether.

Wednesday, August 28, 2013

Greenpeace protest at Shell Belgian F1 Grand Prix event – video

Activists
activated remote-controlled 'Save the Arctic' banners at the winners'
podium of the Belgian Grand Prix on Sunday. Greenpeace said it picked
the event because "millions watch it live" and Shell sponsors F1 racing.
The film was originally posted to YouTube but was subsequently removed,
leading the campaigners to repost it elsewhere online. You can watch at the link below.

The little-questioned assumptions at the heart of the Business-as-usual model for energy development, are that “we are the Saudi Arabia of coal,” and there are “hundreds of years of natural gas” available for us to exploit. I’ve posted recently on the slow fade of the coal industry, and the “cheap natural gas” myth -- but the story continues.

The realization is slowly dawning that we need to develop greater efficiency and renewables, not because it would be nice and “green,” but because that is the only way to maintain our civilization.

Oil companies are hitting the brakes on a U.S. shale land grab that produced an abundance of cheap natural gas — and troubles for the industry.

The spending slowdown by international companies including BHP Billiton Ltd. (BHP) and Royal Dutch Shell Plc (RDSA) comes amid a series of write-downs of oil and gas shale assets, caused by plunging prices and disappointing wells. The companies are turning instead to developing current projects, unable to justify buying more property while fields bought during the 2009-2012 flurry remain below their purchase price, according to analysts.

The deal-making slump, which may last for years, threatens to slow oil and gas production growth as companies that built up debt during the rush for shale acreage can’t depend on asset sales to fund drilling programs. The decline has pushed acquisitions of North American energy assets in the first-half of the year to the lowest since 2004.

“Their appetite has slowed,” said Stephen Trauber, Citigroup Inc.’s vice chairman and global head of energy investment banking, who specializes in large oil and gas acquisitions. “It hasn’t stopped, but it has slowed.”

North American oil and gas deals, including shale assets, plunged 52% to $26 billion in the first 6 months from $54 billion in the year-ago period, according to data compiled by Bloomberg. During the drilling frenzy of 2009 through 2012, energy companies spent more than $461 billion buying North American oil and gas properties, the data show.

Grist reports on the impact fracking wells are having on real estate in heavily drilled areas.

When it comes to the real estate market in Bradford County, Penn., where 62,600 residents live above the Marcellus Shale, nothing is black and white, says Bob Benjamin, a local broker and certified appraiser. There aren’t exactly “fifty shades of grey,” he says, but residential mortgage lending here is an especially murky situation.

When Benjamin fills out an appraisal for a lender, he has to note if there is a fracked well or an impoundment lake on or near the property. “I’m having to explain a lot of things when I give the appraisal to the lender,” he says. “They are asking questions about the well quite often.”

And national lenders are becoming more cautious about underwriting mortgages for properties near fracking, even ones they would have routinely financed in the past, Benjamin says.

That’s a real problem in Bradford County, where 93% of the acreage is now under lease to a gas company.

Local banks are still lending because they have to if they want the business in the county, according to Benjamin, who has been involved in the area’s real estate market since 1980. But, he says, “The big boys, Wells Fargo and the other banks are probably pretty similar, they are going to protect their butt.”

Lawyers, realtors, public officials, and environmental advocates from Pennsylvania to Arkansas to Colorado are noticing that banks and federal agencies are revisiting their lending policies to account for the potential impact of drilling on property values, and in some cases are refusing to finance property with or even just near drilling activity.

Real estate experts say another problematic trend is that many homeowners insurance policies do not cover residential properties with a gas lease or gas well, yet all mortgage companies require homeowners insurance from their borrowers.

“Well, that is a conflict,” says Greg May, vice president of residential mortgage lending at Ithaca, N.Y.-based Tompkins Trust Company.

And don’t count on becoming a Jed Clampett-style millionaire off the gas lease on your back 40.

Don Feusner ran dairy cattle on his 370-acre slice of northern Pennsylvania until he could no longer turn a profit by farming. Then, at age 60, he sold all but a few Angus and aimed for a comfortable retirement on money from drilling his land for natural gas instead.

It seemed promising. Two wells drilled on his lease hit as sweet a spot as the Marcellus shale could offer—tens of millions of cubic feet of natural gas gushed forth. Last December, he received a check for $8,506 for a month’s share of the gas.Then one day in April, Feusner ripped open his royalty envelope to find that while his wells were still producing the same amount of gas, the gusher of cash had slowed. His eyes cascaded down the page to his monthly balance at the bottom: $1,690.

Chesapeake Energy, the company that drilled his wells, was withholding almost 90% of Feusner’s share of the income to cover unspecified “gathering” expenses and it wasn’t explaining why.

“They said you’re going to be a millionaire in a couple of years, but none of that has happened,” Feusner said. “I guess we’re expected to just take whatever they want to give us.”–An analysis of lease agreements, government documents and thousands of pages of court records shows that such underpayments are widespread. Thousands of landowners…are receiving far less than they expected based on the sales value of gas or oil produced on their property. In some cases, they are being paid virtually nothing at all.

In many cases, lawyers and auditors who specialize in production accounting tell ProPublica energy companies are using complex accounting and business arrangements to skim profits off the sale of resources and increase the expenses charged to landowners.